May 4, 2010

News Briefs

  1. Attendees Gear Up for 2010 Credit Congress in Las Vegas!
  2. EU Flames Ratings Agencies Over Assessments
  3. House Passes Government Contracting Reform
  4. Senate Republicans Allow Floor Debate on Financial Reform Bill
  5. Philly Newspapers Auction Held Without Credit Bids in Play, Creditors Win Anyway
  6. Business Professionals Expect More Financial Statement Fraud to Be Uncovered in 2010, 2011
  7. B2B Payments Fraud Still Raging in U.S.

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Upcoming Events

 

Attendees Gear Up for 2010 Credit Congress in Las Vegas!

The start of NACM's 2010 Credit Congress is fast approaching, and attendees are gearing up to get the most out of this year's conference. To help attendees along, whether seasoned veterans or first-timers, here are NACM's Top 10 Ways to get the most out of this year's Credit Congress!

10. Prepare your goals in advance.
Make sure you know exactly what it is you want to take away from Credit Congress. Prepare a list ahead of time and match up your goals with the sessions offered—what do you want to achieve professionally and personally, and how can Credit Congress help you reach that goal?

9. Explore the conference schedule.
Take a look at the sessions offered now—don't wait until you get to the conference!

8. Prepare your "elevator speech."
This is your quick introduction, an overview of your job and company, for use in those brief moments everyone experiences. Have three versions ready:
a) The 30-second version for the briefest moments
b) The one-minute version for those with whom you'd like to network
c) The slightly-longer version for when someone asks you to tell them more

7. Stay at the conference hotel.
Less time getting to conference events means more time to network and gain valuable business experience! It also increases the number of chance encounters you may have, adding even more benefit to your Credit Congress experience.

6. Dress for success!
The more professional you appear, the better the impression you will leave in your wake. Professionals look for fellow professionals. Books may be judged by their covers!

5. Hand out those business cards.
And, conversely, collect as many as you can. Keep a pen or pencil handy and write a short note on the back of each one about the person or your conversation! This will jog your memory when you start your follow-up calls after the conference.

4. Make notes about your key conversations.
At the end of each day, write down a few things about the day—answers to important questions, facts and figures you want to remember, the name of an especially dynamic speaker, etc.

3. Reflect on your conference experience.
After Credit Congress, go back to your list of important goals and questions. Did you achieve what you wanted to? If no, why not? What would you do differently the next time?

2. Buy the audio CD of conference sessions recording.
Was there a session that you couldn't attend? Did you miss out on part of a speech or lose the handouts? Would your peers learn something from a particular session? Each year, NACM makes CDs available that contain the sessions and handouts for your reference.

And the most important step in gaining all you can from attending Credit Congress....

1. Commit to keeping in touch with all the new contacts you made at the conference.
Networking is vital in the business world. Make sure you take full advantage of all the key people you met, as they will have different areas of expertise from which you can pull ideas, assistance or just gain another perspective on a problem!

For more information on this year's Credit Congress, scheduled for May 16-19 at the Rio Hotel in Las Vegas, click here.

Jacob Barron, NACM staff writer

It's Happening at the Credit Congress Expo!

While the Expo doors are open, it's the place to be. During all Expo hours, you have to opportunity to gather information on the latest products and services available from the vendors. Come network with these potential business partners and your credit peers.

Each Expo day contains great value and fun:

Sunday evening. Join NACM in launching the Expo Grand Opening/Opening Reception. Get a feel for the Expo floor and meet and reconnect with peers and vendors.

Monday. Meet your General Session Speaker, enjoy a great lunch and make connections. Then, in the evening, visit with more vendors during the Beer & Browse, all the while, keeping an eye on your bids at the Silent Auction.

Tuesday. Meet your Super Session Speaker, enjoy lunch and wrap up with final visits with your vendors of interest.

Click here for more information about the Credit Congress schedule of events.

EU Flames Ratings Agencies Over Assessments

Though one assistance program had already been announced to bolster Greece's economy and the final details of another were being worked out, credit ratings agencies cut the rating of the nation as well as some of its nearby counterparts last week. And officials in the European Union are still fuming over the developments.

EU Spokesman Amadeu Altafaj Tardio and officials from nations including Germany fiercely panned Standard & Poor's decision last week to downgrade the Greek credit rating despite the commitment of a euro zone bailout of the nation as well as a combined EU/International Monetary Fund package worth $146 million (USD). They questioned the ratings agency, as well as its top counterparts at Fitch and Moody's, essentially alleging S&P doesn't do their homework before committing such an action and, in this case, further contributed to the unnecessary erosion of market confidence in Greek recovery. Tardio even went on to mock the top three ratings agencies, noting how badly they botched research, especially in the residential and commercial real estate/finance sectors, and contributed heavily to the start of the ongoing global economic downturn.

Additionally, German Foreign Minister Guido Westerwelle began a push late last week for the creation of an independent, European ratings agency. Westerwelle said the U.S.-based agencies often have conflicts of interest because of the products and services they push and also accused them of not fully understanding European markets.

S&P's downgrade of Greece was not altogether surprising given the well-documented struggles of its government to reduce spending and budget deficits. Even its decision on perennial debtor Portugal doesn't move the needle too much because of its small economic impact on the EU. However, news last week of the S&P ratings drop for Spain, one of the larger and more important economies in the southern half of Europe, sent the Euro and Spanish markets tumbling. Spain has yet to receive a downgrade from Fitch or Moody's to date, but its future prospects have polarized experts.

Meanwhile, part of the freshly unveiled $146 billion assistance package, the IMF convinced the Greek government to agree to several provisions unpopular with both its private and public workforce: reduced wages for public sector employees, creation of additional taxes for new businesses, cuts to pensions and added taxes on a variety of products including tobacco and alcohol, among others. Significant and ongoing unrest is expected in the form of protests from Greek workers unhappy with aspects such as wage reductions and upping the age of retirement eligibility. All told, market experts appear still unimpressed and quite wary of sustained recovery of the Greek economy during the next few years.

Brian Shappell, NACM staff writer

Need Real-Time Credit News?

Then check out NACM's Credit Real-Time Blog! There's no better place for latebreaking news on all things B2B credit, from legislative changes and analysis to economic updates to domestic and international strategies. To subscribe today, click here.

Don't forget! NACM is also now on Twitter! Follow us for up to the minute news, live commentary and news on deals and NACM programs.

House Passes Government Contracting Reform

The U.S. House of Representatives recently passed a bill geared toward reducing and recovering incorrectly made contracting payments.

The aptly-titled Improper Payments Elimination and Recovery Act (H.R. 3393) would grant government agencies the power necessary to prevent and recover payments made in error. It additionally would require all agencies to identify potential risks for overpayment and report to Congress on the size and nature of mistaken payments as well as the efforts the agency is taking to recover them and prevent any future errors.

According to the Office of Management and Budget (OMB), the federal government authorized $98 billion in overpayments in 2009 alone.

The bill's bipartisan passage drew cheers, most notably from the White House. "Today, the House took another critical step toward increased fiscal responsibility by passing the Improper Payments Elimination and Recovery Act. This bipartisan legislation will help save taxpayer dollars by reining in wasteful overpayments from the federal government to individuals, organizations and contractors," said President Barack Obama. "This bill also puts in place more rigorous thresholds for when programs must be scrutinized for payment errors and expands the authority of federal agencies to use private sector auditors to find and recapture government overpayments. And it dramatically increases transparency and accountability in government spending—in short, it changes business-as-usual in Washington."

The bill has been referred to the Senate Committee on Homeland Security and Governmental Affairs, where it reportedly has bipartisan support, including from Republican heavyweights like Sen. John McCain (R-AZ) and Sen. Tom Coburn (R-OK). The lead sponsor for the Senate version of the bill is Sen. Tom Carper (D-DE).

Jacob Barron, NACM staff writer

Wanted: NACM Member News

Have you recently been honored with an industry award, gotten recognized for your community service or for improving company processes, or promoted within the credit department?

How have you been reducing business risk and keeping current with the trends? Forward your news to bcm@nacm.org by May 25th so we can share it in July's Business Credit magazine.

Senate Republicans Allow Floor Debate on Financial Reform Bill

Following the failure of continued efforts by Sen. Christopher Dodd (D-CT) and Richard Shelby (R-AL) to reach a bipartisan agreement, Republicans recently allowed the financial reform bill to reach the Senate floor for full debate.

"It is time for this debate to begin. And it must be a serious, vigorous debate," said Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs, and original sponsor of the bill. "It is time for the Senate to operate as the Senate should. Members must be allowed to offer amendments. We must allow many voices to be heard as we work to create a sound foundation for our nation's future economic strength."

The first amendment proposed to the bill came from Sen. Barbara Boxer (D-CA) and tread territory familiar to both Republicans and Democrats. "I intend to offer an amendment to the Wall Street reform bill to ensure that no taxpayer funds may be used to bail out financial institutions," said Boxer in a letter to Dodd. "I believe this amendment is very important since both parties agree that we should not have taxpayer-funded bailouts. My provision will eliminate any doubt on this subject."

Despite the strength of Boxer's language, the reality is that while both parties agree on the preclusion of any future bailouts, disagreements abound when it comes to how this is to be accomplished.

Other disputes remain on the subject of the regulation of the derivatives market, the concept of "resolution authority," which would allow regulators to wind down large, risky firms without the use of taxpayer money, and the establishment of a consumer regulator which critics say threatens to harm small businesses in its sweeping reach. "Democrats are attempting to quell opposition to the new consumer bureaucracy by telling small business owners that the bill excludes merchants, retailers or other service providers," said Shelby. "Democrats accurately state that their bill specifically excludes merchants, retailers or others 'not engaged significantly in offering or providing consumer financial products or services.' What Democrats won't tell you is that the word significantly is not defined."

According to Shelby, this could lead to situations whereby any small business extending credit as a matter of course could be subjugated to the new consumer regulator's supervision. "Democrats are asking America's small business owners to relax and trust them and the bureaucrats they empower. Republicans trust small business owners. That is why we oppose this enormous regulatory overreach," Shelby added.

An array of amendments addressing the new consumer regulator, as well as a host of other issues, are expected to be proposed beginning this Tuesday.

Jacob Barron, NACM staff writer

Join the CFDD Network

CFDD exists, in part, to dynamically impact NACM's global vision by being the leader in educational programming and direction, thereby setting industry standards for professional excellence. To learn more about CFDD, click here.

Join CFDD at Credit Congress at its annual Awards and Installation Luncheon on Tuesday, May 18th! For more information, click here.

Philly Newspapers Auction Held Without Credit Bids in Play, Creditors Win Anyway

Creditors to Philadelphia Newspapers LLC fumed that courts disallowed their plan to use a credit bid tactic to buy the publishing group's assets. They did so again when another judge opted against delaying the bankrupt company's auction while creditors appealed the original ruling.

Despite the setbacks, the group won out without any controversial tactics.

A creditors group including Angelo, Gordon & Co. and a division of Credit Suisse purchased assets of the publisher, which operates the Philadelphia Inquirer and Philadelphia Daily News, at a total of nearly $139 million, $105 million of which was in cash, on April 28. The auction winners beat out at least two other groups, including one spearheaded by real estate mogul Bruce Toll, of Toll Brothers.

Though the sale likely will lead to a quick emergence from its bankruptcy status—Philadelphia Newspapers' next bankruptcy court hearing is slated for late May—the creditor group still faces some rough sledding. Among problems awaiting Angelo, Gordon & Co. are union threats of strikes over potential newsroom cuts, a newspaper industry continuing to hemorrhage money for several years and a combative relationship with standing chief executive Brian Tierney, who publicly alleged the creditors' request to delay the auction was an attempt to sabotage and financially cripple Philadelphia Newspapers.

Angelo, Gordon & Co. originally planned to use debt owed to it by Philadelphia Newspapers in large part as its offer, instead of cash, to buy the newspaper publisher in a process called credit bidding. The method has become increasingly common in the present era of fast-paced and/or pre-negotiated bankruptcies. However, credit bidding has created controversy because some attorneys and experts, such as Standard & Poor's, believe the practice can be used to force an owing party to sell quicker and for a lower price than desired because of leveraged threats by creditors. S&P claims the process essentially "sets a floor price to an auction" and discourages a "robust auction process."

Angelo, Gordon & Co. was forced instead to put up a majority of their offer in cash after being rebuffed by judges in the U.S. Court of Appeals Third Circuit. Analysts said the rulings helped promote fair, even-ground status for all parties that bid on the Philadelphia Newspaper assets in the late April auction.

Brian Shappell, NACM staff writer

MLBS Offers Complete Lien and Bond Services and More

NACM's Mechanic's Lien and Bond Services (MLBS) brings best-in-class service options to today's construction credit professional.

MLBS' Lien Navigator is a web-based service that provides up-to-date information for all 50 states and Canada, including notice, lien, payment bond and suit timelines, procedures and other relevant information in a state-by-state/province-by-province format.

MLBS also offers two preliminary notice to owner (NTO) services, deadline tracking, a lien and bond filing program, and a suit against bond and foreclosure service. Both NTO services include, at no additional charge, a Next Action Notification Email. These reminders are sent automatically to ensure that your lien and suit deadlines are met during each step of the lien process.

For more information on NACM's MLBS, click here.

Business Professionals Expect More Financial Statement Fraud to Be Uncovered in 2010, 2011

More than half of approximately 2,100 business professionals (56%) surveyed during a Deloitte webcast about reducing fraud risks think more financial statement fraud will be uncovered this year and in 2011, as compared to the last three years. Almost half of those surveyed, 46%, point to the recession as the reason more financial statement fraud will be uncovered.

Moreover, it's getting harder to assess financial statement fraud risks because of changes in the risk environment, according to 45% of survey respondents while only 11% of respondents believe the task is getting easier.

"With a slow economic recovery likely to keep companies under pressure for several years, having an effective fraud 'safety valve' can help keep the pressure cooker from exploding," said Toby Bishop, director of the Deloitte Forensic Center for Deloitte Financial Advisory Services LLP (Deloitte FAS). "Our respondents recognized that changes in the risk environment have made it harder to assess financial statement fraud risks, but that's the first step in controlling them. Enhancing fraud risk management is a key part of how companies can more effectively mitigate risk and protect shareholder value."

More than one-third (38%) of respondents stated that in the current economic environment, revenue recognition manipulation is the type of financial statement fraud of greatest concern. Meanwhile, 18% of respondents cited 'big bath' write-offs while expectations are low and 14% cited manipulation for debt covenant compliance purposes.

One-half (50%) of respondents said the financial services industry will have the greatest percentage increase in financial statement fraud alleged by the SEC during 2010, as compared to 2009. This was followed by technology, media and telecommunications (14%), consumer business (12%), life science and healthcare (10%) and manufacturing (6%).

"It is no great surprise that business professionals expect the greatest growth in financial statement fraud schemes alleged by the SEC in 2010 to be in the financial services industry," continued Bishop. "Because today's regulatory scrutiny of certain industries may result in additional enforcement measures, it would be prudent for companies to consider refreshing their fraud risk assessments and fraud risk mitigation activities."

One-quarter (25%) of respondents believed that the action most useful to their organization for mitigating the risk of financial statement fraud would be training staff to recognize financial statement fraud. Furthermore, 22% believed that improving the 'tone at the top' would mitigate the risk of financial statement fraud, while 22% believed that improving fraud risk assessments would be most useful to their organizations in this effort.

Source: Deloitte

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B2B Payments Fraud Still Raging in U.S.

B2B payments fraud is still a threat to U.S. organizations, but many are employing fraud control measures to keep it at bay, according to a survey by the Association for Financial Professionals (AFP).

The 2010 AFP Payments Fraud Survey, underwritten by J.P. Morgan, found that a majority of organizations experienced attempted or actual payments fraud in 2009. It also found that most now employ measures to combat these threats, using a combination of account-level solutions and services provided by their banks.

Criminal entrepreneurs commit most of the B2B Payments fraud attempts, with outside individuals accounting for over 85% of the fraud reported in the AFP survey.

Checks are by far the payment method of choice for fraudsters. A full 90% of organizations experiencing at least one fraud attempt in 2009 reported fraud by check, and a full 64% of fraud losses were linked to checks. In fact, the single best action organizations can take to reduce fraud is to reduce or eliminate their use of checks, according to AFP.

"I see payments fraud as a good news/bad news situation," said David Belligner, AFP's director of payments. "On the one hand, fraudsters continue to assault organizations with fraud attempts. On the other hand, organizations have continued to improve their defenses against fraud."

Corporate treasury professionals who responded to the AFP survey cited bank-provided control measures that include positive pay/reverse positive pay (83%), ACH debit blocks (77%), ACH debit filters (58%), and payee positive pay (52%). Two-thirds of companies also rely on internal processes such as daily reconciliation and account segregation, for example using separate accounts for ACH and check transactions. In addition, a handful (8%) of organizations use non-bank provided fraud control services.

Read the full report: www.afponline.org/research

Source: Association for Financial Professionals

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